In the early days, Bitcoin proposed a simple model of how the world could be transformed: The free market was going to produce inflation-proof money with strong privacy features, which could be used to avoid taxes. Over time, people would sell their dollars, replace them with cryptocurrency and the State would wither away to be replaced with an anarchic paradise.
Vinay Gupta is CEO of Mattereum, an Ethereum-based physical asset management platform. He coordinated the Ethereum launch process and first worked in cryptocurrencies in the 1990s. This essay is part of CoinDesk's "Internet 2030" series exploring the ongoing digital revolution.
That was one bitcoin theory of change. It seems improbable now, as it did before, despite the current risk of game-changing inflation in America. The ship may be going down, and Bitcoin may be a life-raft for some (as it is in Venezuela), but the collapse was not caused by Bitcoin. It was caused by good old fashioned mismanagement over decades.
Bitcoin is an evolution. Even if it cannot replace the state, it has spurred a clandestine movement of believers. The next Bitcoin theory of change was remittances, banking the unbanked and creating economic opportunity at the bottom of the pyramid. Through the miracle of the blockchain, transaction costs could be slashed, allowing dollar-a-day laborers everywhere to start businesses with a $40 loan.
Progress has been slow. KYC and currency controls weigh like an albatross around all efforts to bank the unbanked or diminish the state. Now its a little less clear how precisely blockchain will make a difference to our long-term planetary outcomes.
Still, given the waste and excess in society, its never been clearer how much the world needs cryptographic transparency. So what is our theory of change? How are we really going to get a better world out of all this exquisite technology?
A senior military thinker I used to work for described the four phases of history thus: boom, bust, protectionism, war with an option to go from bust back to boom by radical economic reorganization. But e ...